Home Buying in Denver>Question Details

Julie Montgo…, Real Estate Pro in Denver, CO

Why don't people know they can buy a house with 3.5% down?

Asked by Julie Montgomery, Denver, CO Fri Dec 21, 2012

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Maria E. Cipollone’s answer
One of the disavantages of a FHA's loan is that potential buyers have to pay more money in private motgage insurance, because the down payment (only 3.5%) is smaller. There is a first one time fee for PMI that you need to pay and a monthly payment that can be rather costly. Sometimes, is a better idea to wait until you have save the 20% for a downpayment.

Best of Luck,

Maria Cipollone

Century 21 Tenace

http://www.Flahomespecialist.com
2 votes Thank Flag Link Fri Dec 21, 2012
I think most people DO know that they can obtain a home loan with only 3.5% down, the problem is that the median home price in Denver is hovering around $230K and most people do not have $8000 sitting around. Furthermore there are very few DSF homes abailable under $200K in the Denver metro area and anything under $150K and your buyers are competing with tons of investors, and no seller is going to accept an offer from a buyer obtaining an FHA loan over an investor's cash offer. Buyers are better of socking away money until they can increase their buying power.
1 vote Thank Flag Link Fri Dec 21, 2012
I think the blame falls on lenders and to a certain degree real estate professionals.

The professionals are not doing a good enough job gettimg this info out.

When my husband and I bought our home, we too were in our 20's. Our agent/lender did not tell us about the CALHFA program which allowed us to put 3% down until I told them we would have to hold off on buying a home for another six months to a year so that we could build our savings up more. We did not want to go broke buying our home.

Once my lender saw I was serious about walking (for a while) all of a sudden she comes up with this program offered by the state of California(CALHFA)

Congrats on buying a home of your own. PLEASE TELL EVERYONE YOU KNOW ABOUT THE FINANCING YOU SECURED!!!

Kawain Payne, Realtor
"The Buyer's Agent"
0 votes Thank Flag Link Thu Dec 27, 2012
My wife and I are young (25) have excellent credit and qualified for a loan with a 3.5% interest rate. We are closing on our home in the next couple of weeks. We are putting down 3.5% on a short sale and unfortunately we are having to pay mortgage insurance. It is our goal to fix the house up a bit and then in the next 2 years have the home appraised and hopefully with the market conditions changing and prices going up we are hoping our home will appraise for MUCH more than we are paying. We are getting the steal of the century on this home. My question is - if we have the home appraised in a couple of years and it comes in high enough to make the equity we have in the home over 20% do we have to refinance our home to get the mortgage insurance dropped or can we just ask our lender to waive the mortgage insurance due to the substantial increase in property value. Again, we are young and do not fully understand this entire mortgage process. We know that we do not want to be making someones house payment for them which is why we are purchasing our home and fixing it up. We have no intentions of selling this house as it is our "forever home" where we want to raise our children and retire. Is there a process to go thru to get the mortgage insurance dropped from our loan?
0 votes Thank Flag Link Thu Dec 27, 2012
With FHA loans, there are some minimum requirements for paying mortgage insurance. You'll need to see how long the term is for your loan. Likely, it's 2-3 years. Once you reach that, you can just refinance for a conventional loan without mortgage insurance.
Flag Wed Jan 9, 2013
Well, you can ask that same question about anything. The last I checked, people are not omniscient like you.

And, Maria does have a point. The monthly difference between a conventional 20% down loan and a 3.5% down loan with PMI is not insubstantial. Roughly, it's about 30-40% more per month. Maybe your idea of nominal is quite different, but that's another discussion.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Thu Dec 27, 2012
Probably becasue alot of people are not aware of the different types of loans, My job as an agent when I first make contact with a buyer lead, my first question is to ask them them if they are first time home buyers, and if the are, I explain that they can do FHA loan with the 3.5% down, I gave them an example as to how much 3.5% be of the puchasing price.
0 votes Thank Flag Link Thu Dec 27, 2012
Well, that's really not the point, is it??? Instead of paying the landlord every month, people can buy their own home with just 3.5% down. The monthly mortgage you're referring to is spread over 30 years, so the costs is nominal. The point is PEOPLE CAN BUY HOMES WITH JUST 3.5 DOWN!!!!
0 votes Thank Flag Link Fri Dec 21, 2012
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